SMEs cut costs in shared-office concept

On the fourth floor of Development Towers in Nairobi’s Central Business District, three entrepreneurs have teamed up to rent office space— a move aimed at reducing operating costs.

The monthly rent, which comes to about Sh34, 000 for the 350 square feet room, was over and above what each entrepreneur could afford.

“It was more prudent to share out the office space because we can now easily divide the rent and meet other office expenses by sharing resources,” says Mr. Finlay, the head tenant who requested his second name not to be quoted because the tenancy agreement does not allow subletting.

“As long as the rent is paid on time the landlord does not ask too many questions,” he says. “On paper there is no subletting, but practically that is easily handled.”

In the new arrangement they have shared out with each paying Sh11, 400.

Although sharing office space, through hook or crook, has been a long entrenched concept in the Kenyan property market the momentum has picked up in the past two years as entrepreneurs seek ways to cut on their high operating costs in a sluggish economy, industry players say.

“We are having more people asking if there are offices they can share with others,” says Mr. Nathan Mabeya, a director of Rutna, a real estate agency, adding that the key driver for the entrepreneurs is the savings accrued in such an arrangement.

Office rent prices though have stagnated, property agents say rent has stood at an average of Sh65 per square feet.

Buildings where extra services are offered such as generators or cleaning services usually ask for an extra Sh15 as a service charge.

This is because of an increase in the available office space over the last couple of years on the back of a robust construction sector.

Still, for Mr. Finlay who runs a electronics consultancy firm, says the cost sharing arrangement has helped them afford an office space “on the better end of town”.

His two other colleagues with whom he shares an office space are also in the consulting business in the energy sector.

This means unlike wholesalers and retailers, all three of them—being consultants—do not require such large office spaces.

“With the arrangement we could afford a place where it is comfortable to have clients come over,” he says.

To cut further on costs they have shared out secretarial services, where they have hired a receptionist who answers the phone and handles other administrative work.